Cybersecurity is a critical area of concern for every business. Most businesses have, by this time, been victimized by a cyberattack or an attempted attack. Given this, as well as the dramatic increase in the overall number of reported cyberattacks, businesses have been forced to reckon with the significant financial, legal, and reputational consequences of such attacks. Recent high-profile attacks—like those involving Solar Winds and Colonial Pipeline—have only highlighted the need for concern about protecting against malicious cyber actors.

Businesses are right to be concerned. Cyberattacks have serious consequences. For one, the costs associated with defending against and responding to attacks are significant—particularly for companies that do not have adequate cyber insurance coverage. Remediation costs can be especially burdensome, and, in many cases, will total millions of dollars. On top of this, there are significant costs associated with disruption to normal business operations, which, in some cases, are greater than the remediation costs. There are also significant reputational costs associated with being victimized by a cyberattack. In the event that the attack becomes public, businesses are often the subject of unfavorable media attention, and there is a risk of losing the business of customers, clients, and partners who fear for their own information, data, and reputation.

Of course, there are also significant legal costs associated with cyberattacks. Victims are frequently sued by individuals or entities whose personal or sensitive information was affected by the attack. While the legal merits of such lawsuits are debatable and the outcomes are variable, defending against these cases is expensive and resource intensive.